CAD Gains Ahead of BoC Decision Amid Fed Rate Hike Expectations

The Canadian dollar is rising against its US counterpart ahead of the Bank of Canada's rate decision today, as investors increasingly expect the Federal Reserve to hike interest rates in September. The BoC is expected to keep its benchmark interest rate at 2.25%, but the market sees a 70% probability that the Fed will raise rates by 25 basis points this month.

The US dollar's strength on safe-haven demand and rising Treasury yields has also contributed to the CAD's gain. Meanwhile, gold prices have fallen to their lowest level in three weeks due to higher interest rate expectations and a stronger US dollar.

Canada's manufacturing sector expanded for a fifth consecutive month in August, but trade tensions are casting doubt on whether this growth can be sustained. The BoC will also consider the country's inflation data, which rose 3% year-over-year in July, within its target range of 1%-3%.